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Costs and Benefits of Solar Panels

If you’ve ever wondered how much you would need to invest to harness the sun’s energy for your own personal use, this article will give you an idea of the costs and benefits of each system. On the simplest level, there are two types of solar panels. Solar photovoltaic (PV) panels which produce electricity, and solar thermal panels which produce hot water.

Solar Photovoltaic

Panels which convert the sun’s energy into electricity use solar voltaic cells to capture it. They do not need direct sunlight to work, generating electricity even on cloudy days (though not as much). The cells convert the energy into electricity which can be used in the house, or sold back to your own electricity supplier.

In May 2012, the Department of Energy and Climate Change assessed the costs of solar PV, based on the average 3kWp (kilowatts peak) system that is installed. The average cost of installation was found to be £7,700. Whilst larger systems cost more, they are actually more cost effective in terms of the savings they produce.

On average, a 3kWp system has been found to generate 2,500 kilowatt hours of electricity every year. This is equivalent to about 3/4 of the average household’s electrical needs for a year. A larger system could therefore exceed the household’s requirements, with the extra being sold onto grid.

So the obvious benefit is that once you have paid for the installation your bills will be significantly reduced. If you are producing more electricity than you need you can sell it back to the grid. Furthermore, if you are eligible for the Feed-in Tariff scheme, this could generate savings and income of approximately £540 per year (based on rates applicable since September 2012). Here you get paid for both the electricity you generate and use and that which is sold back to grid. At this rate, the average payback is around 14 years.

There is very little maintenance required. As the panels are tilted at an angle, they should be cleaned by rain water. Being dirty will impair their performance, so if necessary you can contact window cleaning companies to wash them for you. The panels should last for 25 years.

Solar Thermal

Solar thermal panels work in conjunction with a hot water cylinder, so you must make sure you have a suitable one, or room to fit one, if you are thinking of installing this type of panel. The panels heat water that is circulated through a coil in the hot water cylinder, transferring the heat to the domestic hot water stored in the cylinder. If the panels are not able to produce enough hot water, an immersion heater or boiler will top it up. Once again there are the benefits of cutting you bills and reducing your carbon footprint.

The average cost of this system is £4800 and it produces moderate savings. In the summer it will produce most of your hot water. In the winter, it will need the boiler or immersion heater to produce most of it.

Maintenance costs are low and they come with 5 or 10 year guarantees. As with solar voltaic, they need to be kept clean, though hopefully rainfall will achieve this. You should also check it, or have it checked, for leaks. Leaks of the antifreeze in the panel will have a strong smell so should be noticeable. The pump may need changing after 10 years or so at a cost of around £100.

Studies have shown savings of around £55 per year (230kgCO2/year) when replacing gas heated hot water and £80 per year (510kgCO2/year) when replacing immersion hot water. However, savings will vary from house to house, depending on which way the panels are facing and which part of the country they are located.

From September 2013, the government’s renewable heat incentive may entitle you to payments for heat generated from solar panels.


Clearly from a financial perspective, solar voltaic panels produce far greater savings. Continual improvements in technology and falling installation costs are also bringing the payback time down. Whilst this article has looked at costs and benefits in financial terms, what it cannot measure is the importance to you of going green. However, if the environment is your priority, the fact that your investment will pay back in time is a comforting bonus.


Author bio:

Mike Genner writes for Gas Safe London Ltd, who provide advice on gas safety certificate costs and work on all types of boilers. Based in London, they also offer discounted gas safety certificates for landlords across the Capital.

Clay Miller
the authorClay Miller
I am the creator/writer of and I'm an advocate for oceans, beaches, state parks. I enjoy all things outdoors (e.g. running, golf, gardening, hiking, etc.) I am a graduate of the University of Kentucky (Go Wildcats!!). I'm also a huge fan of the Pittsburgh Steelers. I was born and raised in the beautiful state of Kentucky.

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